GUANGZHOU BAIYUN INTERNATIONAL AIRPORT(600004)：3Q22 RESULTS IN LINE;CONTINUES TO INTRODUCE TOP-TIER LUXURY BRANDS

3Q22 results in line with our expectations
Guangzhou Baiyun International Airport (GBIA) announced that in 1-3Q22, revenue dropped 8.9% YoY to Rmb3.31bn, and net profit attributable to shareholders stood at -Rmb627mn (vs. -Rmb490mn in 1-3Q21). In 3Q22, revenue rose 3.4% YoY and 60.7% QoQ to Rmb1.28bn, and net profit attributable to shareholders reached -Rmb110mn (vs. -Rmb80mn and -Rmb435mn in 3Q21 and 2Q22), largely in line with our expectations.
3Q22 revenue edged up YoY; effective cost control. The firm’s revenue rose 3.4% YoY in 3Q22, growing faster than its operating data. In 3Q22, aircraft movement and passenger traffic both increased 1% YoY, and cargo throughput declined 9% YoY. The proportion of passenger traffic of international routes grew 0.5ppt YoY in 3Q22. Meanwhile, the firm’s operating cost dropped 0.5% YoY to Rmb1.20bn in 3Q22, showing effective cost control. Gross margin improved 1.7ppt YoY in 3Q22, but overall expenses rose 20.2% YoY, with the expense ratio up 1.9ppt YoY.
Trends to watch
Continues to introduce top-tier luxury brands. GBIA’s non-duty-free sales of luxury brands were relatively weak before the onset of the pandemic, while recently, a number of brands such as Louis Vuitton, Gucci and Tiffany gradually entered the airport, with the firm’s luxury business likely to enter a growth stage. We expect the introduction of such brands to bring marginal improvement to the firm’s earnings.
Watch the strong growth potential for earnings contributed by per passenger consumption at DFS after the reopening of international flights. GBIA signed a supplementary agreement with CTG Duty Free at end-June, 2022, paving the way for solid growth in future earnings driven by the sales at duty-free stores (DFS). The firm’s DFS sales were growing rapidly before the pandemic. Assuming per passenger consumption at DFS (which equals sales value at DFS divided by international passenger throughput) of Rmb150, Rmb200, Rmb250, or Rmb300, we estimate the firm’s net profit may reach Rmb1.48bn, Rmb1.67bn, Rmb1.86bn and Rmb2.06bn in 2024 respectively.
Financials and valuation
Given greater-than-expected impact from the lingering COVID-19, we lower our 2022 earnings forecast from -Rmb349mn to -Rmb688mn, while maintaining our 2023 and 2024 earnings forecasts at Rmb687mn and Rmb1.67bn. The stock is trading at 49x 2023e and 20x 2024e P/E. We maintain OUTPERFORM and our TP of Rmb17.70 (25x 2024 P/E), offering 24% upside.
Risks
Slower-than-expected reopening of international routes; unexpected changes in costs; disappointing progress of DFS business.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。